The U.S. Government Shouldn’t Run the Country’s 5G Network

Executive Summary

The White House recently outlined its vision for U.S. deployment of next-generation high-speed mobile networks, known as 5G. Their plan included new auctions for needed high-frequency radio spectrum, reallocation of $20 billion in annual universal service funds for fiber-optic deployments in rural areas, streamlined permitting requirements, and the continued development of a National Spectrum Strategy, which will identify and free up underutilized frequencies currently assigned to federal agencies. But the real significance of the meeting is what the Trump administration didn’t announce: a single 5G network built, secured, and operated by the federal government itself. Approaches to government intervention differ around the world, but government’s proposed role in the 5G buildout underscored the success of bi-partisan policy that goes back to the 1990’s, which leaves digital infrastructure largely to private sector development — especially when the needs of U.S non-digital systems like roads and airports are in need of federal support.

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President Trump and Federal Communications Commission Chairman Ajit Pai recently appeared together at the White House to highlight initiatives aimed at accelerating U.S. deployment of next-generation high-speed mobile networks, known as 5G. Their plan included new auctions for needed high-frequency radio spectrum, reallocation of $20 billion in annual universal service funds for fiber-optic deployments in rural areas, streamlined permitting requirements, and the continued development of a National Spectrum Strategy, which will identify and free up underutilized frequencies currently assigned to federal agencies.

The 5G standards, which are now being finalized by global engineering working groups, will use those new frequencies to deliver dramatic increases in mobile communication speeds and capacity, while lowering both energy requirements and network response times, or “latency.” Early tests confirm 5G networks may be as much as 100 times faster than today’s average rates.

But the real significance of the meeting is what the Trump administration didn’t announce: a single 5G network built, secured, and operated by the federal government itself.

To be sure, the auctions, rural fiber, and spectrum strategy are all essential components in ensuring successful rollout of 5G throughout the U.S., which has the most mobile broadband connections among western nations. At the same time, the enormous geographic size and wildly uneven population density between the coasts has made universal and uniform high-speed adoption difficult. According to FCC data, low-population areas of the U.S. still lag in both access and speed.

Most analyses of the meeting focused on the promise of accelerated government support for 5G rollout, and for subsidies to build rural backbone networks. A few reporters, however, connected the dots linking the meeting to a raging debate within the administration over how best to manage 5G development that has roiled, hot and cold, for over a year.

In early 2018, documents first leaked of an initial plan proposed by a senior official in the National Security Council for the government to take over construction of a nationalized 5G network, following the model of the interstate highway system in the 1950’s.

That idea resurfaced last month, with senior members of President Trump’s reelection campaign calling for airwaves currently assigned to the Department of Defense to be used to build a single, wholesale 5G network that mobile operators would lease instead of building their own, competing infrastructure. A single private company, not one of the existing carriers, would have the job of building and operating it under government supervision.

Until recently, President Trump had stayed largely out of the debate. In an enigmatic February, 2019, tweet, the president said only “I want 5G, and even 6G, technology in the United States as soon as possible.” (6G network standards have only just begun development.)

Earlier the same week, National Economic Council Director Larry Kudlow again flatly rejected the idea of a government run network. At a meeting of CTIA, the mobile industry’s trade association, Kudlow said, “The principles we’ve worked to rebuild the economy will be applied to the telecom sector and 5G. They are free market, free enterprise principles. Note how well we did on 4G; we will apply the same principles on 5G. That is our policy.”

Kudlow’s statement set the stage for Pai’s appearance with President Trump, and they struck the killing blow to any proposal for a federal takeover of 5G. “In the United States, our approach is private-sector driven and private-sector led,” the president said. “We had another alternative of doing it that would be through government investment and leading through the government. We don’t want to do that because it won’t be nearly as good, nearly as fast.”

White House support for continued private network buildouts comes at a critical time. All four major U.S. carriers — Verizon, AT&T, T-Mobile and Sprint — have been investing heavily in new 5G infrastructure, which relies less on traditional cell towers and more on smaller but more dense deployments of antennae, supported by massive fiber-optic backbone networks, including those built in the last decade by cable providers such as Comcast.

Leading Wall Street analysts have expressed skepticism about the business case for 5G, noting the absence, at least so far, of the kind of killer apps that drove rapid consumer adoption of 3G and 4G networks — text messaging for the former and video and software apps for the latter. But 5G disruptors are coming, though they will be widely disbursed across industries as different as health care, entertainment, transportation, and manufacturing. 5G networks will likely play a major role in connected homes and cities as part of the Internet of Things, for example, and in coordinating communications between autonomous vehicles and with “smart” roads and other public infrastructure.

Those proposing the nationalization of 5G argued in part that a single network was necessary to ensure the security of these and other critical applications, and to protect U.S. networks from interference by non-U.S. providers. It was also seen as a way to better compete with China, where equipment makers have so far taken the lead in securing patents for key 5G technologies. But it is unclear how a nationalized network would improve on the security practices of carriers who have been operating mobile networks for decades, or how consumers could be convinced to use a government run network that might be used as an instrument for increased surveillance.

There was also no indication, more to the point, of how the government would pay to build, operate, or maintain a network serving hundreds of millions of consumers and perhaps billions of connected devices. Initial estimates for 5G network deployment already run into the hundreds of billions of dollars.

Approaches to government intervention differ around the world — some are investing directly and indirectly in 5G technology. Like the U.S., for example, South Korea began offering limited 5G service earlier this month, with Japan, China, Turkey, and some European providers hoping to launch by 2020. In many cases, regulatory agencies are leading these efforts, working with former government-owned carriers now fully or partly privatized but still subject to close oversight of rates and service offerings.

Calls for a nationalized U.S. 5G network were motivated, at least in part, by concerns that private investors couldn’t compete with government-backed deployments elsewhere. But the administration was right to reject those calls, confident that competitive pressures between U.S. carriers and equipment providers will, once again, keep the U.S. in the lead. In doing so, the White House underscored the success of bi-partisan policy that goes back to the 1990s, which leaves digital infrastructure largely to private sector development. In my view, the results speak for themselves. U.S. hardware and software companies lead lists of the world’s most valuable internet enterprises. And where U.S. operators have invested over $1.5 trillion over the last 20 years, according to trade group USTelecom, the increasingly regulated EU lags in broadband speeds, adoption, and investment.

Meanwhile, Congress has yet to advance legislation to rebuild the nation’s crumbling physical networks, including roads, bridges, electrical grids, public transportation, and water systems — an early promise from the Trump campaign. The needs of our non-digital systems are already overwhelming. The American Society of Civil Engineers’ most recent “report card” gives U.S. infrastructure an overall grade of D+, estimating that essential repairs and updates over the next ten years will cost more than $4.5 trillion.

So, if Washington really sees a connection between infrastructure, competitiveness, and national security, it should focus its attention and limited dollars on the physical networks. We need to encourage, not confuse, the investors who have built and repeatedly rebuilt the broadband ecosystem, and who already taking to lead in its next iteration.

Editor’s note: Due to editing error, an earlier version of this article incorrectly listed its authors. This version has been updated and corrected.